Foreign investors selling in Indian equities likely over: Report

New Delhi, July 13 (IANS) Foreign selling in Indian equities is likely behind us, with improving domestic fundamentals and extremely light overseas investor positioning expected to support a gradual return of foreign capital, a report has said.

According to an analysis by Goldman Sachs, investor sentiment towards Indian equities is likely to turn incrementally positive despite renewed geopolitical tensions in West Asia, which could keep markets volatile in the near term.

The equity benchmark Nifty 50 index is expected to rise to the 26,500 mark by June 2027, implying an upside of nearly 10 per cent from current levels, it added.

Moreover, the latest assessment marks a notable shift from the firm’s stance in May this year, when it had described the risk-reward profile of Indian equities as less attractive than that of North Asian markets and did not expect foreign investors to return quickly even if crude oil prices moderated.

According to the report, global equity investors used India as a funding market during the first half of 2026, selling a record $30 billion worth of Indian equities over a period of about three-and-a-half months.

However, the trend has started reversing since mid-June, with overseas investors turning modest net buyers and bringing in around $2 billion, largely into financial stocks.

Global funds remain significantly underweight on Indian equities, leaving ample room for investors to increase allocations if confidence in the domestic recovery strengthens, according to analysts at Goldman Sachs.

While earnings downgrades and valuation concerns continue to weigh on sentiment, improving visibility on India’s economic recovery could encourage investors to price in a turnaround ahead of time, according to them.

Earlier concerns over the potential impact of artificial intelligence (AI) on India’s equity market had also limited investor enthusiasm.

Additionally, foreign institutional investors (FIIs) turned net buyers to the tune of Rs 15,157 crore in July so far.

–IANS

ag/